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dc.contributor.authorGrinols, Earl L.
dc.contributor.authorHenderson, James W.
dc.date.accessioned2005-08-13T17:41:49Z
dc.date.available2005-08-13T17:41:49Z
dc.date.issued2005-08-13T17:41:49Z
dc.identifier.urihttp://hdl.handle.net/2104/322
dc.description.abstractMonopoly response to buyers who pay fraction c of the product cost is to raise the buyer price for the initial quantity q0 from p0 to 1/c p0, and adjust to a different price and quantity only if profits are thereby raised further. A 25% prescription drug plan co-payment provision, for example, magnifies the pharmaceutical patent holder’s profits more than a fourfold increase in price at the original output would do. This is detrimental to the adoption and use of prescription drug plans. In addition to the appearance of abusing a prescription drug program, the inducement to patentable pharmaceutical research and development (R&D) cannot be optimal both before and after such a plan’s institution. Possibly it is optimal in neither. This paper describes an efficient incentive plan for R&D that does not depend on monopoly and thus is not an impediment to co-pay provisions that might be part of a prescription drug plan.en
dc.format.extent552720 bytes
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen
dc.relation.ispartofseriesBaylorBusiness Economics: Working Papers Seriesen
dc.relation.ispartofseries2004-057-ECOen
dc.subjectResearch and Developmenten
dc.subjectPrescription Drugen
dc.subjectCo-paymenten
dc.subjectPatent Protectionen
dc.subjectIntervention Principleen
dc.titlePharmaceuticals, Prescription Plans, and Promoting Progressen
dc.typeWorking Paperen


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